What wallet to choose for storing crypto safely?

Among the tips for beginner crypto investors and crypto traders, you can often find a warning about the insufficient reliability of storing funds on exchange wallets. Unfortunately, the events of the current year more than clearly show that off-exchange storage is really needed. At the same time, it is not so important which of the coins, in your opinion, is more preferable for investing QNT vs XRP. Much more important is the significance of the amount of investment for you personally and the consequences of its possible loss.

Cold and hot storage of cryptocurrency

The very term “cryptocurrency storage” is rather conditional, since the coins remain in the blockchain. A cryptocurrency wallet is needed to store keys that confirm your rights to an asset and provide access to coins. There are always two keys: public and private.

The division of crypto wallets into cold and hot is the most famous classification of vaults. It is based on the features of storing a private key.

Cold wallets usually include hardware wallets, miniature physical devices with installed software that provides access to assets. Such devices are not connected to the Internet, moreover, the connection is made indirectly, using a PC or mobile device.

All software wallets that can be installed on your device, as well as online clients, are classified as hot. In addition, a wallet can be custodial or non-custodial.

Hot storage is considered less secure, as there is a non-zero chance of them being stolen as a result of a successful hacker attack. If you prefer custodial storage, this probability is higher, since the private key is stored on the company’s server. By choosing a non-custodial wallet, you organize the storage of the private key yourself.

Hot wallets are available for download on PC and mobile devices, as browser extensions and services on specialized sites. Popular apps release additional versions over time and become cross-platform.

Which wallet to choose

First of all, you should proceed from your goals for acquiring cryptocurrency. It is advisable to keep short-term investments USD to WOM for the purpose of active trading and accumulation of other coins for long-term storage in different wallets. As a rule, experts recommend using cold storage for storing large amounts for a long time. Relatively small amounts for frequent use are more convenient to keep in a hot wallet.

Safety

The level of cybersecurity of cold storage is higher, since the keys are stored by the user. When choosing a hot wallet, pay attention to the ability to save a secret phrase or private key. Also, do not neglect the creation of backup copies. This is important for restoring access in the event of a media device being damaged or lost. In addition, it is better to use all the security settings options as much as possible.

Ease of use

Hot vaults with a permanent internet connection are more convenient for fast transactions. In addition to the basic functions of storing, receiving and transferring assets in hot storage, additional features are often provided:

Staking.

Internal exchange of coins.

Purchase of digital assets with bank cards.

Interest accrual for storing coins and other options.

To complete a transaction from a cold wallet, you will need an additional step – connecting to a device with the Internet. In some modern hardware wallets, integration with software storages is provided for ease of use.

One way or another, the choice of a way to store a cryptocurrency always comes down to finding a compromise solution between the convenience of using assets and their security. Therefore, many power users have several different wallets for different purposes.


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